The Plot Gets Upbeat For Netflix

We could talk about Apple’s disconcerting results, McDonald’s tepid expectations or the high price of tea (and everything else) in China, but why not head toward the end of the week with an
upbeat story line? Netflix.

“A Resurgent Netflix Beats Projections, Even Its Own,” crows the hed over Brian Stelter’s piece in the New York Times. “For
all those who have doubted its business acumen, Netflix had a resounding answer on Wednesday: 27.15 million,” he writes.

That’s 2.05 more million streaming
customers in the U.S. in the fourth quarter than Netflix had in the third.

“It’s risen from the ashes,” Lazard Capital Markets senior analyst Barton Crocket
tells Stelter. “A lot of investors have been very skeptical that Netflix will work. With this earnings report, they’re making a strong argument that the business is real, that it will
work.”

The holiday season was “particularly strong, driven by consumers buying new electronic devices, including tablets and smart TVs” that offer Netflix’s
service, CEO Reed Hastings and CFO David Wells said in a letter to investors, Reuters’ Lisa Richwine reports.

But that’s only part of the story. Netflix, you’ll recall, suffered a huge backlash
from consumers when it separated its DVD-by-mail business from streaming, in effect raising prices by about 60%. But it has pounded away at those defectors in eat-crow emails over the months, offering
a month of free service to try out what is undoubtedly a more robust plate of offerings. Customers seem to like what they can see.

“Netflix continues to invest in exclusive
content to differentiate its service -- including the deal that will allow it to offer Disney, Pixar, Marvel and Lucasfilm movies at a time when such movies have typically been found on premium cable
TV networks,” Dawn C. Chmielewski reports in the Los Angeles
Times. “It also has invested in such high-profile original series as “House of Cards,” created by director David Fincher and starring Kevin
Spacey and Robin Wright.”

Netflix also appears to be hitting its stride as an alternative distribution vehicle for niche movies and documentaries, as Deadline
Hollywood’s Nellie Andreeva pointed out when it acquired the rights to Morgan
Spurlock’s comedic documentary “Mansome” for the U.S., U.K. and Canada in September.

Indeed, Ellen Bryon
reported in the Wall Street Journal earlier this week that juicers have
been flying off retailers’ shelves since a 2010 documentary, “Fat, Sick and Nearly Dead,” hit Netflix in July 2011. The film, which
chronicles the 60-day juicing diet of an Aussie who comes to the U.S. to shed a lifetime of accumulated fat through a medically supervised diet of liquid veggies and fruit, had limited distribution in
theaters.

After-hours trading added as much as one-third to the company’s share price last night, Wired’s Marcus Wohlsen writes, and if the “enthusiasm carries over past the opening bell” today, its shares will top their 52-week high of
$133.43. But, as he points out, “that price pales compared to the company’s 2011 flirtation with $300.”

Carl Icahn is one happy camper after yesterday’s
Fourth Quarter 2012 Earnings Q&A Session, which you can listen to here.

“We still own every share
we bought, and we believe it’s still got tremendous potential,” Icahn, the patient investor formerly known as a ruthless corporate raider tells Bloomberg’s Meg Tirrell. “One of the parameters we use is
when everybody doesn’t like something, that’s when you buy it.”

And so it is that the roughly 5.54 million shares and options he purchased in the fall for
$168.9 million, when the stock was trading at about $58, are worth about $453 million this morning. That’s about 10% of the company.

Icahn was also speaking nicey-nice about
CEO Hastings yesterday, saying he’s “always found him to be an extremely bright and engaging guy,” after issuing “blistering” comments about Netflix’ “poor
corporate governance” when it issued a poison pill in
November to protect itself against a forced sale.

“We have no further news about [Icahn’s] intentions, but have had constructive conversations with him about
building a more valuable company,” Netflix said in it statement yesterday.

This is the kind of original programming you normally see in fairy tales, isn’t it?

Thom Forbes has written about marketing and media for more than 25 years. He was editorial director of Adweek and its sister publications in the 1980s and has covered the beat as a freelancer since 1990. For more than three years, he wrote Around the Net in Brand Marketing for MediaPost.